Magseis Fairfield, a company specializing in Ocean Bottom Node (OBN) offshore surveys, has announced cost-cutting measures which will include layoffs and furloughs.
Citing increased market uncertainty due to the coronavirus and lower oil prices, Magseis Fairfield said it would implement measures to cut SG&A by a further 30% and capital expenditure by 50% compared to previously communicated levels.
"The coronavirus has so far not had any material effect on ongoing operations, but it is clear to us that a new market situation with lower oil prices and a weaker economic outlook will have an impact on our business for the remainder of this year. We have now finalized our revenue scenario planning and are taking action to align the cost base and investment levels to the new revenue outlook," says CEO Carel Hooijkaas in Magseis Fairfield.
Compared to the FY 2019-levels, SG&A costs are being reduced by approximately 60% to around $25 million, and Capex reduced by approximately 80% to around $15 million.
"These lower cost and capex levels reflect the management's current best assessment of the activity outlook and will change depending on the actual activity level for the remainder of the year," Magseis Fairfield said.
"The new cost measures will include temporary layoffs/furlough, headcount reductions, and other related cost reduction initiatives, that will be executed in accordance with the local rules and regulations in each applicable country. Magseis Fairfield has decided to cancel 2020 salary adjustments and cash bonuses across the company," the company said.
Magseis Fairfield did not say how many people would be affected by the layoffs and furloughs
"Our asset-light model and the temporary layoff mechanisms give us great cost base flexibility to navigate this new market reality. We enter this cycle from a position of strength following the debt refinancing and equity raise that was completed in February 2020.
"In combination with an improved backlog, which includes the recently announced award of a deep-water project in Mexico, and the new cost measures, this enables us to preserve and protect our cash position while continuing to pursue new market opportunities", said Hooijkaas.
As previously reported, Oslo-listed Magseis Fairfield in March said it had secured a deepwater Ocean Bottom Node project offshore Mexico.
The work is scheduled to start in the third quarter of 2020 and will take approximately 60 days. The survey will be carried out in water depths of 2,000 to 2,600 meters.
The company at the time said that, due to the coronavirus situation, travel restrictions may affect crew changes going forward.